If you’re starting a business in Ontario, one of the first decisions you’ll face is whether to incorporate federally under the Canada Business Corporations Act (CBCA) or provincially under the Ontario Business Corporations Act (OBCA).
Both create a legally distinct corporation. But they differ in important ways that affect your costs, name rights, compliance obligations, and growth potential.
Quick comparison
| Factor | Federal (CBCA) | Provincial (OBCA) |
|---|---|---|
| Filing fee | $200 | $300 |
| Name protection | Canada-wide | Ontario only |
| NUANS search required | Yes | Yes |
| Residency requirement | 25% Canadian directors | No requirement |
| Extra-provincial registration | Required per province | Only if expanding |
| Annual returns | To Corporations Canada | To ServiceOntario |
| Online filing | Yes (Corporations Canada) | Yes (ServiceOntario) |
When federal incorporation makes sense
You plan to operate nationally
Federal incorporation gives you the right to use your business name in every province and territory. This is essential if you:
- Sell products or services across provincial borders
- Plan to open locations in multiple provinces
- Operate an e-commerce business serving all of Canada
You want the strongest name protection
A federally incorporated name has Canada-wide protection. This means no other federal corporation can register the same or a deceptively similar name.
Provincial incorporation only protects your name within Ontario. Someone in British Columbia could incorporate with the same name.
You’re building for investment or acquisition
Investors, especially institutional ones, often prefer dealing with federal corporations. The CBCA is:
- Well-understood by Bay Street lawyers and VCs
- Used by the majority of publicly traded Canadian companies
- Seen as the “default” for serious growth-stage businesses
The vast majority of venture-backed Canadian startups incorporate federally — it’s become the standard for companies seeking institutional investment.
When Ontario provincial incorporation makes sense
You’ll only operate in Ontario
If your business is local — a restaurant in Toronto, a dental practice in Ottawa, a landscaping company in London — provincial incorporation is simpler and keeps your compliance obligations lighter.
Non-Canadian director situation
The CBCA requires that at least 25% of directors be Canadian residents. The OBCA has no residency requirement for directors.
This is a critical distinction if:
- You’re a non-resident starting a Canadian business
- Your co-founders or investors are based outside Canada
- You want maximum flexibility in board composition
Slightly simpler compliance
Provincial corporations file annual returns with ServiceOntario only. Federal corporations must file with both Corporations Canada and register extra-provincially in Ontario (and any other province where they operate).
The hidden cost of federal incorporation
While the federal filing fee ($200) is lower than Ontario’s ($300), there’s a catch: you’ll also need to extra-provincially register in Ontario to do business there.
| Cost item | Federal | Ontario |
|---|---|---|
| Incorporation filing | $200 | $300 |
| Extra-provincial registration (Ontario) | ~$300 | N/A |
| Total to operate in Ontario | ~$500 | $300 |
So if you’re only operating in Ontario, federal incorporation actually costs more upfront.
Director requirements deep dive
Federal (CBCA)
- Minimum 1 director
- At least 25% must be Canadian residents
- If 1–3 directors, at least 1 must be Canadian resident
Ontario (OBCA)
- Minimum 1 director
- No Canadian residency requirement
- Director must be at least 18 years old and not bankrupt
Changing from provincial to federal (or vice versa)
It’s possible to continue (convert) from one jurisdiction to another, but it’s:
- Expensive (legal fees + government filing fees)
- Time-consuming (weeks to months)
- Administratively complex
Our recommendation
For most Ontario founders who plan to grow beyond a single location or province:
Go federal. The national name protection, investor familiarity, and growth flexibility justify the additional cost of extra-provincial registration.
If you’re a local business with no plans to operate outside Ontario, or if your directors aren’t Canadian residents, go with Ontario.
Not sure? That’s exactly what we help with.
Preferway guides you through the federal vs. provincial decision and handles the entire filing process. Get started.